Credit Offtake Trails Deposit Growth, Keeping CD Ratio Under 80% : CareEdge Ratings
Synopsis
* Credit offtake and deposit growth have cooled. Additionally, deposit growth has now outpaced credit growth in the current fortnight.
* As of May 30, 2025, credit offtake reached Rs 182.9 lakh crore, marking an increase of 9.0% year-onyear (y-o-y), significantly slower than last year’s rate of 16.1% (excluding merger impact). The slowdown can be attributed to a high base effect and muted growth across segments.
* Deposits rose 9.9% y-o-y, totalling Rs 231.7 lakh crore as of May 30, 2025, a decrease from 12.2% the previous year (excluding merger impact). This slower growth is primarily attributed to a rise in alternative investment opportunities, deposit repricing and a higher base effect.
* The Short-Term Weighted Average Call Rate (WACR) has decreased to 5.80% as of May 30, 2025, down from 6.56% on May 31, 2024. This decline follows three successive repo rate cuts and liquidity infusion by the Reserve Bank of India (RBI).
Bank Credit Growth Rate Declines for the Fortnight
Figure 1: Bank Credit Growth Trend (y-o-y% %, Rs Lakh crore)
Credit offtake rose by 9.0% y-o-y and increased by 0.3% sequentially for the fortnight ending May 30, 2025, and came in slower than the previous year’s growth of 16.1% (excluding the merger impact). This slowdown can be attributed to a higher base effect and muted growth at the start of the fiscal year.
Figure 2: Bank Deposit Growth Rate Decreased Marginally for the Fortnight (y-o-y%)
Deposits increased by 9.9% y-o-y and increased by 1.25% sequentially, reaching Rs 231.7 lakh crore as of May 30, 2025, lower than the 12.2% growth (excluding merger impact) recorded last year. The total outstanding certificate of deposits issuances reached Rs 5.13 lakh crore for the fortnight ending May 30, 2025, a growth of 39.2% y-o-y, as banks continued to rely on raising funds through short-term certificate of deposits amidst subdued deposit growth.
Figure 3: Credit-to-Deposit (CD) Ratio Slightly Declines, Remains Below 80% – Incl. Merger Impact
* The Credit-Deposit (CD) ratio witnessed a marginal decrease, remaining below the 80% mark for the fifth consecutive fortnight. As of May 30, 2025, the CD ratio was 78.9%, down by 72 basis points from the previous fortnight. This decrease was primarily driven by a higher deposit inflow of Rs 2.85 lakh crore compared to a lower credit offtake of Rs 0.59 lakh crore during the current fortnight. A combination of liquidity surplus in the system and anticipated monetary easing drove this rise in deposit inflows, as per the CareEdge Report.
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